Market to stabilise: analyst
An analyst is bullish Australia’s wool price will stabilise at its current quote, despite tumbling for a third consecutive week and dipping below $20/kg for the first time in more than two months.
The Eastern Market Indicator closed at $19.92 last week, 21¢ down from the previous week’s value, to mark the first time the commodity had traded at less than $20/kg since early August.
The fall, which also signalled a $1.02 drop in wool’s value over the past three weeks, came alongside an increased national offering of 38,317 bales rostered for sale.
The EMI suffered a more significant correction in $US terms, dropping US51¢ to end the week at US1410¢.
Despite the decrease, Dyson Jones Wool Marketing Services State manager Peter Howie said he expected wool to stabilise at its current price.
“It appears the price has found a new level and I think it will trade at around here now,” he said.
“The short-term price looks healthy going into spring.
“While we are seeing the limited wool selection, the market should stay healthy.”
The Australian Wool Exchange’s latest report found it was difficult to attribute the EMI decrease to currency movements.
AWEX senior market analyst and document author Lionel Plunkett said when viewed in $US terms the EMI had dropped US91¢ during the continued value fall over the last three weeks.
Superfine types experienced the greatest losses last week, with 16.5 micron wool down 90¢ to 100¢/kg.
It came as the 17 to 18 micron wools decreased between 40¢ and 80¢/kg.
Against this downward trend, strong demand for medium-type wools in the 19.5 to 21.5 micron range resulted in gains of 5¢ to 15¢/ kg. Mecardo managing director Robert Herrmann said although the EMI suffered another loss, the Western Market Indicator experienced growth in a positive sign for the market.
Mr Herrmann said the WMI spike was delivered on the back of a positive final day of selling at Fremantle.
“The wool market continued to retrace this week with most of the falls coming at the beginning of the selling before stabilising towards the end,” he said.
“In Fremantle, the market lost ground on Wednesday where the WMI fell 26¢ but posted a more positive result on Thursday, gaining 17¢ to end the week at $21.32/kg.”
A reduced offering of 34,467 bales has been rostered for sale in Sydney, Melbourne and Fremantle this week.